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Nortel Unifies Optical

Nortel Networks Corp. (NYSE/Toronto: NT) has moved its metro and long-haul optical products under one Optical Networks division headed by Brian McFadden, who formerly headed the company's optical long-haul division.

"It made sense operationally. And Brian has a lot of metro experience," says a company spokesperson. Nortel's also intent on integrating its optical technologies in future metro and long-haul offerings. So moving it under one roof seemed the best way to proceed.

When reports of the division change hit the Canadian papers this morning, it was unclear whether by taking over metro optical as well as long haul, McFadden wouldn't be displacing colleague Frank Plastina, who heads up Metropolitan and Enterprise Networks. That's absolutely not the case, Nortel says. Plastina will continue to be in charge of Nortel's intelligent Internet, VOIP, enterprise, and optical Ethernet product lines.

Nortel continues to have three divisions: Wireless, headed by Pascal Debon, as before; the new Optical Networks, headed by McFadden; and Metropolitan and Enterprise Networks, headed as before by Plastina (who was once, back in the Roth era, widely considered a CEO-designate).

Debon, McFadden, and Plastina continue to report to CEO Frank Dunn.

"There's been no management change," says Greg Mumford, CTO of Nortel. "All we've done is add a bit to Brian's responsibilities."

An internal memo from Dunn, apparently issued to employees last week, outlines McFadden's new responsibilities: "Brian will have P&L responsibility for the combined Metro Optical and Long Haul business. His accountabilities include investment decisions, priorities and product marketing for non-Optical Ethernet applications, as well as R&D deliverables for all optical products, including optical product requirements for Optical Ethernet solutions."

In an interesting twist, McFadden is taking on all of Nortel's DWDM and next-gen Sonet products, including the OPTera Metro 5200 and 3500 series, spokespeople say. But several so-called optical Ethernet products, including the OPTera Metro 1000 series and the Passport 8600, are staying with Plastina's division. To make matters hairier, Plastina will continue to focus on optical sales to enterprise customers.

The split's a confusing one, especially since Nortel acknowledges that the OPTera Metro 5200 and 3500 series can be used in optical Ethernet applications. Indeed, it raises questions about how permanent this latest deck shuffling will be.

"It wouldn't surprise me from a reporting basis if Nortel was to reduce its structure to only two divisions -- wireless and wireline," says a Canadian financial manager, who asked not to be named. It would be easy to just give Plastina a separate title, he says, if McFadden were eventually put in charge of all optical products. After all, the position of COO hasn't been filled since Clarence Chandran left last year (see Nortel's Empty Room at the Top).

Meanwhile, though, Nortel seems intent on its present strategy. Marco Pagani, who was head of the Metro Optical business under Plastina's direction, will stay in the Metro/Enterprise division, but will be in charge of a new Optical Ethernet business.

Analysts seem unfazed by the news. "Long-haul optics isn't expected to recover until late 2003 at the earliest, so I view it positively that [Nortel is] getting each division in a position to be profitable," says the Canadian analyst.

In other news, Nortel's managed to exceed expectations in the sale of its equity and common share offering made late last week. The overallotment, or greenshoe offering, has been taken up and oversubscribed, Nortel says, bringing in about US$1.475 billion instead of the originally anticipated $1.3 billion (see Nortel to Raise $1.3B and Nortel Increases Offering Estimate).

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
sigint 12/4/2012 | 10:15:37 PM
re: Nortel Unifies Optical zipple:
Why did you choose Alcatel as the survivor? (Cisco seems obvious to me, but Alcatel less so.)
__________________________________________________

Thinking about it - bulk of Cisco's revenue is from the enterprise market. The mantra of that market to reduce equipment to commodities. Cisco may ultimately become the victim of that commodification.

If the PC market is an indication, bulk of the stuff sold would be assembled from boards and parts picked from the flea market. Code could be downloaded from the Vendors of components.

Cisco would continue to be a leading supplier, but would they continue to dominate the market the way they do now ?

ALA has probably a wider geographical spread of market as compared to NT or LU. Their presence in Asia is impressive, as it their ability to cultivate politicians that matter in protected markets. Don't forget, today they are the largest telecom company on the planet.
dljvjbsl 12/4/2012 | 10:15:41 PM
re: Nortel Unifies Optical This is probably an unhelpful post but ther is one Nortel employee who is absolutely contributing nothing to the company. He recently received a major pay increase. His position could be elimiated without causing any disruption to the company. I wonde if Nortel could lay off John Roth and use his salary to fund a team of 8 to 10 people.
dodo 12/4/2012 | 10:15:42 PM
re: Nortel Unifies Optical Hitekeng

Those "well connected" are seeking refuge under Wireless.

Oh yes, some VPs have already jumped ship since last march because they knew the lay offs would be announced for Q'2. One even had the gall to draw up a list of who should be axed in June while she managed to find a safe place in Wireless. This is a person who does not know how to define a network element.

We just have to wait and see
zipple 12/4/2012 | 10:15:43 PM
re: Nortel Unifies Optical dljvjbsl says:
" If that consolidation does not happen soon then the whole industry may crash."

As opposed to the good times we're enjoying now, I suppose.

Why did you choose Alcatel as the survivor? (Cisco seems obvious to me, but Alcatel less so.)
ben35bates 12/4/2012 | 10:15:43 PM
re: Nortel Unifies Optical The cutting has apparently started inside NT optical marketing operations in Ottawa and Montreal, according to a posting yesterday.
Any details? It must be part of the 2,000 to 3,500 cuts to longhaul and optical components announced a week or so ago.


Also the following appeared in Toronto paper today:

Nortel may wield axe to staff again
Business from prime customer Sprint seen to slow down: 10% could go: source

Robert Thompson
National Post
Saturday, June 15, 2002

Nortel Networks Corp.'s may be facing even more job cuts because of a slowdown of business from one of its main wireless customers, sources inside the Canadian networking giant said yesterday.

Talk of more layoffs came after Frank Dunn, Nortel's chief executive, held a "town hall" meeting yesterday that was broadcast for all company employees. Mr. Dunn addressed several issues, including a recent equity offering which raised US$1.67-billion, and the 3,500 job cuts to the company's optical components division.

Mr. Dunn said employee surveys indicate that a majority of employees list job security as their main concern. He also said company managers have been asked to identify a possible redirection of resources if areas of the business continue to falter.

He said the company was not planning any large layoffs, but a source close to Nortel said it was preparing a job cut of up to 10% of its 42,000 workers. The source at Nortel said the layoff was likely to occur by the end of June, which is also the close of the company's second quarter.

Another Nortel employee felt Mr. Dunn's speech did not signal layoffs were coming, but said Mr. Dunn told employees that the company's management would be holding a series of meetings over the coming weeks meant to identify which parts of the company were operating effectively, and which were underperforming.

A senior Nortel employee in the company's wireless division, who asked not to be named, said: "We basically took that to mean there will be a lot more layoffs."

Nortel confirmed the internal meeting took place, but would not comment on what was discussed or potential job cuts.

The town hall meeting came on the same day that Sprint Corp.'s PCS division, one of Nortel's largest current customers in its wireless group, said it will add 10% to 15% fewer users than the three-million it initially forecast for 2002 because of price competition and new credit policies. Sprint added it will sign up 300,000 wireless customers for its current quarter, less than half the amount added last quarter and well short of analysts' estimates.

According to the source inside Nortel's wireless group, the Sprint account has slowed, leaving many with little work and a feeling that their jobs are in jeopardy. Nortel is helping to build Sprint's wireless data network, a project that has been ongoing for more than 18 months.

Michael Urlocker, an analyst with UBS Warburg, said Nortel's wireless division had been one of the few points of strength for the company in recent months. There is a concern that projects like the Sprint network improvements will slow over the next six months, Mr. Urlocker said.

Without an improvement in business spending, Nortel will likely be forced to cut more jobs, Mr. Urlocker said.

"In my discussions with people in the industry and investors, I've found there is still a fairly widely held belief that there is more room for cuts," he said. "Nortel is going to need to examine which business units it decides to keep."

Mr. Dunn also told employees during the meeting that the company is still on target to record revenue of US$3.2-billion in the fourth quarter of 2002.

dljvjbsl 12/4/2012 | 10:15:43 PM
re: Nortel Unifies Optical
" If that consolidation does not happen soon then the whole industry may crash."


As opposed to the good times we're enjoying now, I suppose.


My supposition is that the entire industry is facing the prospect of bankruptcy. The whole industry could just run out of money and be unable to proceed. This industry has to be sized to the very reduced market or it is not viable. At least that is my opinion.

My other opinion is that Nortel is not going to be one of the survivors if there are any.
dljvjbsl 12/4/2012 | 10:15:44 PM
re: Nortel Unifies Optical
I do not see a possibility of an over-build, the telecom infrastructure is grossly inadequate at the moment. The Indian government has liberalised the sector, but hasn't gone overboard handing out sops. This has probably prevented the industry from growing the way it did in China. But, it has also prevented an overbuild.


This is a real question about eh capability of China and India in developing enough business to make a significant difference to the fate of the bloated optical industry. If the US and Europe cannot and do not require enough bandwidth to support this industry then what chance is there that India and China will.

Note that the problem of the optical industry is not a minor mismatching of demand to supply as Roth and company tried to portray last year, it is a major capaity and vendor glut that is going to require a massive consolidation in the industry. If that consolidation does not happen soon then the whole industry may crash. My vote is that Cisco and Alcatel will survive. The others will vanish all together (Nortel) or leave the optical business.
sigint 12/4/2012 | 10:15:46 PM
re: Nortel Unifies Optical How much money is India willing to commit to build this network. India may want a nerwork but do they have sufficient funds to support the very large optical indistry that developed during the bubble. This may turn into a very good thing for India. They could leverage their limited funds by playing off the desperation of optical networking companies to find any sort of revenue to pay their operational expenses.
However it wouldn't help Nortel or the optical industry in general verymuch. If it took about 2 years to overbuild the US market, how long would it take to do the same thing in India? Especially since there is likely to be very little profit in this due to the very dire straights of the optical vendors
__________________________________________________

At the moment, telecom is a necessity in India and not a luxury. The sector has been de-regulated considerably, and this particular network has aggressive plans.

They have considerable revenue already from mobile services, and as I understand, most of their mobile equipment is from Nortel.

It was to be expected that land based fibre would be lit with Nortel equipment, given the fact that the two companies have done business for a while.

I do not see a possibility of an over-build, the telecom infrastructure is grossly inadequate at the moment. The Indian government has liberalised the sector, but hasn't gone overboard handing out sops. This has probably prevented the industry from growing the way it did in China. But, it has also prevented an overbuild.

And BTW, this particular network is not short of cash. They already have spent the money putting the fibre place. The industry has exhibited some inmmaturity - the various networks have been sqabbling about revenue sharing, but a government broked peace pact is on its way. The equipment installation should follow.
Litewave 12/4/2012 | 10:15:47 PM
re: Nortel Unifies Optical On the other hand, that might be a too expensive way of doing something that is happening without needing any "help" from the outside.

Too true!

Cisco doesn't need to help rid itself of this particular competitors, they're doing it all themselves.

The incessant product /people shuffling and reorganization is completely alienating customers. Every damn box these days is an OPTera something. How stupid does Nortel think customers are?

If you ask me, the problem is FD hasn't had the guts to do what Steve Jobs did with Apple when he came in - clean shop, not just people, but product lines as well.
let-there-be-light 12/4/2012 | 10:15:51 PM
re: Nortel Unifies Optical I wonder whether this is the time for Cisco to strike:

Buy up what's available of Nortel and then simply shut down a potential competitor for good...

On the other hand, that might be a too expensive way of doing something that is happening without needing any "help" from the outside.
hitekeng 12/4/2012 | 10:15:57 PM
re: Nortel Unifies Optical Optical Sales and Marketing are being cut at 60% today in both Ottawa and Montreal. Those "well connected" are seeking refuge under Wireless.
Stay tuned....
dljvjbsl 12/4/2012 | 10:16:03 PM
re: Nortel Unifies Optical
As I've pointed out in another post - in terms of revenue it was probably very little. But the potential is big. This is a new network, they have lots of fibre and excellent geographical coverage in India. Massive equipment installation would eventually follow. If NT can provide quality equipment instead of dumping crap like LU did, and follow it up with good service, they have a potential source of big business.


How much money is India willing to commit to build this network. India may want a nerwork but do they have sufficient funds to support the very large optical indistry that developed during the bubble. This may turn into a very good thing for India. They could leverage their limited funds by playing off the desperation of optical networking companies to find any sort of revenue to pay their operational expenses.

However it wouldn't help Nortel or the optical industry in general very much. If it took about 2 years to overbuild the US market, how long would it take to do the same thing in India? Especially since there is likely to be very little profit in this due to the very dire straights of the optical vendors.
sigint 12/4/2012 | 10:16:04 PM
re: Nortel Unifies Optical litewave:
Nah, can't have been a big win. NT doesn't waste any opportunities these days to blow their trumpet, they have to, under the current circumstances, but all I see is some piss-ass wireless deals here and there.

Must have been some small incremental order, if any.
__________________________________________________

As I've pointed out in another post - in terms of revenue it was probably very little. But the potential is big. This is a new network, they have lots of fibre and excellent geographical coverage in India. Massive equipment installation would eventually follow. If NT can provide quality equipment instead of dumping crap like LU did, and follow it up with good service, they have a potential source of big business.
dljvjbsl 12/4/2012 | 10:16:07 PM
re: Nortel Unifies Optical
They are on the mat, to be true, but they just exceeded expectations in their new public offering, so as long as they pay the bills, they are not bankrupt.


One really wonders if the actions being taken by management at Nortel is not effectively creating a de facto bankruptcy. In a bankruptcy, existing shareholders lose their investments in favor of nre investors. What effectively differetiates the current situation from that? Massive sahre price osses andnow massive dilution.
vermillion 12/4/2012 | 10:16:08 PM
re: Nortel Unifies Optical Oh really? Did you make it through High School yet? Can you read basic finance and perform basic math skills? Good! The READ AND LEARN:
http://biz.yahoo.com/fin/l/n/n...

ITS OVER - PERIOD.

---

Really, Dreck-docs? What do I see when I look at your cute little URL?

Net Income Applicable To Common Shares ($841,000,000) ($1,826,000,000) ($3,468,000,000) ($19,428,000,000)

OK, so it's not pretty, but they are posting ever smaller losses.

They are on the mat, to be true, but they just exceeded expectations in their new public offering, so as long as they pay the bills, they are not bankrupt.

Why don't you leave hairy-scary high-tech business to the big boys, Dreck-docs? We won't hold it against you if you admit you don't know what you are talking about.

-vermillion
vermillion 12/4/2012 | 10:16:09 PM
re: Nortel Unifies Optical [FLAME ON]

With message content repetition of slightly over 99% in the recent post of 6/12/2002 5:49:29 AM, there is NO HOPE that techdocs will make an original observation anytime in the next year (or ever). This is the most Predicatable Opinion in the History of Light Reading - Period. LOOK at the UN-original sh*t, factor in the Platitudes and alarmism and its very clear to see that Chapter & chapters of this drivel is on the way. techdocs is HYSTERIA.

Gee, techdocs, let me see if I understand the point behind your subtle and insightful analysis: you think Nortel is in trouble? Really?? Wow, you are a genius. Now PLEASE shut up and let the people who have something to say about the story and the people behind it do so, Dreck-docs.

XOX
vermillion
Litewave 12/4/2012 | 10:16:09 PM
re: Nortel Unifies Optical Nortel recently had a big business win in India from an aggressive Network called Bharati Telecom. I wonder why they have kept quiet about it. Embarrassed at how much they had to discount, perhaps ?

Nah, can't have been a big win. NT doesn't waste any opportunities these days to blow their trumpet, they have to, under the current circumstances, but all I see is some piss-ass wireless deals here and there.

Must have been some small incremental order, if any.
sigint 12/4/2012 | 10:16:14 PM
re: Nortel Unifies Optical The discounts, even if they are huge, are irrlevant as long as it generates cash flow in these very trying times.
_________________________________________________

Agreed. More imortantly, it establishes Nortel with a carrier that has humungous amounts of fibre, big plans and deep pockets in a market that is bound to grow.

I only hope that NT doesn't compromise on quality of the stuff to bolster the bottomline. LU had tried that last year and ended up badly discrediting themselves and their product.
zweisel 12/4/2012 | 10:16:19 PM
re: Nortel Unifies Optical The discounts, even if they are huge, are irrlevant as long as it generates cash flow in these very trying times.
sigint 12/4/2012 | 10:16:24 PM
re: Nortel Unifies Optical "Also bear in mind that most of the planet does not even come close to the LH networks installed in the USA. It is very nearsighted to think that because the USA is saturated that vast untapped markets such as Asia, Europe, and South America represent no growth areas. Nortel is simply trying to reduce reduncies which is a very prudent and smart business strategy."
__________________________________________________

True enough. Nortel recently had a big business win in India from an aggressive Network called Bharati Telecom. I wonder why they have kept quiet about it. Embarrassed at how much they had to discount, perhaps ?

Nortel is almost an institution - would be pretty horrible if it were to go down.
edgecore 12/4/2012 | 10:16:25 PM
re: Nortel Unifies Optical
As if the Canadian Gvt would ever let Nortel go under?

Jean Chretien, even though he is a complete senile idiot would have no choice but to step in...way to many people hold NT, way to many people would stop spending!

EC
dodo 12/4/2012 | 10:16:27 PM
re: Nortel Unifies Optical Litewave

Let's hope someone gives him the pink slip BUT I doubt it. The old boys' network is still safe and sound.

This is the guy who canned the access BU and guess what- Nortel threw away its possibility to make an impact in the last ( or firs) mile market segment because everyone was "gung-ho" on optical.
Litewave 12/4/2012 | 10:16:27 PM
re: Nortel Unifies Optical His successor SS will re-organize to pull back all his cronies.

God help Nortel with that arrogant S*B inplace of Gary D.
Belzebutt 12/4/2012 | 10:16:30 PM
re: Nortel Unifies Optical http://biz.yahoo.com/fin/l/n/n...

Right, what I see is a steadily shrinking loss, shrinking SG&A, and at the same time a rising R&D (!) - i.e. this company believes strongly in its future. Don't forget the cash situation has improved too.

Thanks for the link techdocs, things are better than I thought :)
OpticalPhonon 12/4/2012 | 10:16:30 PM
re: Nortel Unifies Optical techdocs - you point to a link and that ids your rebuttal. you must be a friend of zweisel.
techdocs 12/4/2012 | 10:16:32 PM
re: Nortel Unifies Optical Oh really? Did you make it through High School yet? Can you read basic finance and perform basic math skills? Good! The READ AND LEARN:
http://biz.yahoo.com/fin/l/n/n...

ITS OVER - PERIOD.
OpticalPhonon 12/4/2012 | 10:16:34 PM
re: Nortel Unifies Optical Your analysis makes no business sense since stock price does not mean bankruptcy. It represents the near term outlook in terms of revenue. It is the amount of cash on hand versus the burn rate that dictates bankruptcy. Basic finance 101.
OpticalPhonon 12/4/2012 | 10:16:34 PM
re: Nortel Unifies Optical Also bear in mind that most of the planet does not even come close to the LH networks installed in the USA. It is very nearsighted to think that because the USA is saturated that vast untapped markets such as Asia, Europe, and South America represent no growth areas. Nortel is simply trying to reduce reduncies which is a very prudent and smart business strategy.
Belzebutt 12/4/2012 | 10:16:35 PM
re: Nortel Unifies Optical None of these companies makes money on LH. LH must be able to support itself just like any other business. It is no good just to say that Nortel is doing no worse than anyone else since everyone elseGăÍs losing money as well.

Unlike some others though, Nortel has other businesses that can subsidize LH for a while, like you pointed out. Despite that, NT wants to make the LH business profitable as soon as possible, without exiting the business. If others exit, those who rely too much on LH, it will just play to NT's advantage. I don't think exiting LH would be a smart move because there still is money to be made there, the companies simply need to start investing what's actually worth investing. Keeping investing in LH is indeed a risk right now, but some risks need to be taken as always.
zweisel 12/4/2012 | 10:16:35 PM
re: Nortel Unifies Optical dljvjbsl, ever hear of a loss leader product line?
Belzebutt 12/4/2012 | 10:16:36 PM
re: Nortel Unifies Optical Nevertheless the point still remains that in LH is not profitable and not likely to become profitable. It should not be subsidized by other divisions. Portfolio management is about investing in areas to get maximum return. LH is moribund now. If it does recover, it will be a low growth, low margin, highly competitive market with any number of competitors. This does not sound like a potential star business to subsidize. Rather it sounds more like a Gă dogGăÍ business that should be shed as soon as possible.

By the way it was Ross Healy who said that there is 10 to 20 years of capacity already installed. This is not a prediction that would support the idea of a profitable LH business.



So logically, do you also think LU should shed its LH business, along with Ciena and all the other players? So CIEN should just give up half its revenues and lay off all these people? CORV should just give all the money back to the shareholders and go home?

You keep talking about NT, but there are many companies that are a lot more dependent on LH and your scenario sounds a lot more grim for them.
dljvjbsl 12/4/2012 | 10:16:36 PM
re: Nortel Unifies Optical
So logically, do you also think LU should shed its LH business, along with Ciena and all the other players? So CIEN should just give up half its revenues and lay off all these people? CORV should just give all the money back to the shareholders and go home?


Yes, many of these companies should exit the LH business. The issue that you still have not addressed is profitability. None of these companies makes money on LH. LH must be able to support itself just like any other business. It is no good just to say that Nortel is doing no worse than anyone else since everyone elseGăÍs losing money as well. This is just an indication that process of consolidation is about to being. This is a good thing. A few large players could make some sort of living in a low growth business that others and I expect LH to become. (note that this is an improvement over the high contraction business that it is now).

If Nortel has a specific capability that makes LH attractive to it, then perhaps there might be a reason for it to remain in the LH business. Perhaps this would be its established relationship with the telcos. This asset could presumably be exploited through a cooperative marketing agreement with Ciena or some other players, rather than trying to maintain a position in an unprofitable market.
zweisel 12/4/2012 | 10:16:38 PM
re: Nortel Unifies Optical techdocs wrote - "With Nortel Share Dilution of slightly over 40% at the recent price of $1.42, there is NO HOPE that Nortel will be here a year from now."

... you have a great business sense... NOT! The stock price does not mean a company is going bankrupt. It is the lack of cash to pay its debtors and the inability to meet covenants that bankrupt a company. The issue of raising cash in the equity markets will hurt.

You obviously want Nortel to go under but adly your dream will not come true.
dljvjbsl 12/4/2012 | 10:16:38 PM
re: Nortel Unifies Optical
You will be happy to hear then, that Dunn said he wants to make NT profitable in the CURRENT market, without waiting for and end to the downturn. Surely this would make you and the shareholders happy, isn't that what you just asked for?


I'm glad that Mr. Dunn is trying to do this. It is certianly better than the previous Nortel strategy of waiting for a recovery that keeps receding into the future.

Nevertheless the point still remains that in LH is not profitable and not likely to become profitable. It should not be subsidized by other divisions. Portfolio management is about investing in areas to get maximum return. LH is moribund now. If it does recover, it will be a low growth, low margin, highly competitive market with any number of competitors. This does not sound like a potential star business to subsidize. Rather it sounds more like a Gă dogGăÍ business that should be shed as soon as possible.

By the way it was Ross Healy who said that there is 10 to 20 years of capacity already installed. This is not a prediction that would support the idea of a profitable LH business.


edgecore 12/4/2012 | 10:16:40 PM
re: Nortel Unifies Optical
When this comeback (of sorts) does happen...how much infrastructure could Nortel actualy move?

Isn't Qwest's Network only using 40 lambda's out of a possible 160? With math like this, multipled over all other carriers and SP's who are using less of their existing capacity...where will the steady growth come from...Metro :-)

Plus, who wants to buy that overgrown HDX, its huge...and if people do buy it, what is realistic volume on that Puppy?

EC
Belzebutt 12/4/2012 | 10:16:41 PM
re: Nortel Unifies Optical Roth told us all that It would come back by 2001. Then it was 2002 and now it is at least late 2003 or 2004. Nortel keeps pursuing a mirage that continually recedes into the distance. A respected analyst in Canada, who was one of the few to correctly identify the bubble, says that there is 10 to 20 years of capacity already installed. When will Nortel finally rid the shareholders of this money pit?


You will be happy to hear then, that Dunn said he wants to make NT profitable in the CURRENT market, without waiting for and end to the downturn. Surely this would make you and the shareholders happy, isn't that what you just asked for?
dodo 12/4/2012 | 10:16:41 PM
re: Nortel Unifies Optical "It makes sense from a development perspective."

then why did they split it in the first place back in January 2001 when the LH market has already shown that it is going down?

Some of the Sales force was already axed in November 2000 because of poor visibility as far as LH sales and some of the emerging carriers were already showing signs of near death.

It is once again the musical chair of re-orgs and nothing gets done because of restructuring. They need to cut 3,500 and some of the boys from LH will survive at the expense of the serfs in Metro and Optical Ethernet.

After this re-org, let's watch and see what happens in sales when Gary Donahee leaves. His successor SS will re-organize to pull back all his cronies.

This will be the merry-go-round of re-org until Q'3 when the ILECs and RBOCs start budgeting capex for 2003.

This is how the days go by
dljvjbsl 12/4/2012 | 10:16:41 PM
re: Nortel Unifies Optical
But it will come back, and will be a good market to be in - as long as Nortel can hold out till 2004.


Roth told us all that It would come back by 2001. Then it was 2002 and now it is at least late 2003 or 2004. Nortel keeps pursuing a mirage that continually recedes into the distance. A respected analyst in Canada, who was one of the few to correctly identify the bubble, says that there is 10 to 20 years of capacity already installed. When will Nortel finally rid the shareholders of this money pit?

However suppose that it does come back as Nortel predicts in late 2003. What sort of business will it be? Will it be marked by the frenetic growth of the bubble? More likely it will be a low growth business requiring extensive R&D to compete and with numerous competitors to drive down prices. This is not a recipe for a profitable high margin business.




techdocs 12/4/2012 | 10:16:42 PM
re: Nortel Unifies Optical With Nortel Share Dilution of slightly over 40% at the recent price of $1.42, there is NO HOPE that Nortel will be here a year from now. This is the most Diluted Stock in the History of the Stock Market(s) - Period. LOOK at the UN-balance sheet, factor in the Liabilities and assets and its very clear to see that Chapter 7 is on the way. Nortel is HISTORY.
nt_survivor 12/4/2012 | 10:16:44 PM
re: Nortel Unifies Optical The main rationale for consolidation, IMO, is to reduce redundant development effort for metro vs. LH -- not "rearranging the dirt". Nortel's numerous mistakes nonwithstanding, don't always look for the most cynical reason for the change. It makes sense from a development perspective.

Belzebutt 12/4/2012 | 10:16:45 PM
re: Nortel Unifies Optical This statement seems very odd to me. Long haul optical will be losing money but by arranging the divisions in the right way, its losses won't stand out. The fact remains that long haul optical is a dead business and should be shed by Nrtel as soon as possible.

NT is not "shedding" the business, but many of the recents cuts are in long haul, to make it profitable. Nortel is doing exactly what they should be - keeping their competency in that area but making sure they don't waste too much money developing products there is just no demand for in the next while.
Nuetrino 12/4/2012 | 10:16:46 PM
re: Nortel Unifies Optical "The fact remains that long haul optical is a dead business and should be shed by Nrtel as soon as possible"

But it will come back, and will be a good market to be in - as long as Nortel can hold out till 2004.

I do agree that they should dramatically skinny down the operation - go dormant, except for some fundamental research areas specific to LH.

The move to place metro under McFadden is to hide the bad news (and the mess) from his existing organization. Thus the problem, all Nortel is doing is re-arranging the dirt, their not really cleaning house the way it should be done.

In contrast, the Enterprise business (which has strong signs of life and profit) has a close strategic relationship to Metro, a helluva lot closer than LH - you'd think if Nortel really got it, they would be doing everything they could to create a seamless offer based on their Enterprise products and the Metro products and leverage thier demand knowledge both ways, i.e. knowledge of Enterprise needs to Metro SPs and knowledge of Metro SP capability to Enterprise.
zweisel 12/4/2012 | 10:16:46 PM
re: Nortel Unifies Optical dlsjbsl wrote - "The fact remains that long haul optical is a dead business and should be shed by Nrtel as soon as possible."

Sure - then everyone should dump optical: Lucent, Tellium, Ciena, Fujitsu, Optishpere, Innovance... you don't drop a business because it is temporarily in the dumpers. The wireless business units can fund LH until it returns like LH did to wireless for years.
dljvjbsl 12/4/2012 | 10:16:47 PM
re: Nortel Unifies Optical
"Long-haul optics isn't expected to recover until late 2003 at the earliest, so I view it positively that [Nortel is] getting each division in a position to be profitable," says the Canadian analyst.


This statement seems very odd to me. Long haul optical will be losing money but by arranging the divisions in the right way, its losses won't stand out. The fact remains that long haul optical is a dead business and should be shed by Nrtel as soon as possible.
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